How Do I Calculate the Value of Nontrading REITs?

By SmartMoney Staff

Question: A significant portion of my IRA is invested in two different nontraded commercial real estate investment trusts. I need to start taking required minimum distributions in 2012, and I want to know how to do the calculation for something that has no specific value.

– Allan Weber, Maryville, Tenn.

Answer: The Financial Industry Regulatory Authority doesn’t require nontrading REITs to be revalued until 18 months after they’re first offered (and once a year thereafter). If you’re within that initial window, you can treat the offering price as your value. If you think the assets are worth something other than the amount on the REIT’s statement, ask your IRA trustee, such as a bank or a broker, to confirm as much in writing, says Ara Oghoorian, president of ACap Asset Management in Beverly Hills, Calif. It’s the trustee’s duty, in fact, to correctly value what’s in your account. And you may need such confirmation if the tax man comes knocking .

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